Entrepreneurs’ Ethical dilemma:
🙏Ramu🙏14/7/2023
I believe, entrepreneurship is one of the few ways through which one can lift oneself as well as lift the standards of living of the other people.
However, if the company grows, the direct beneficiary may not be the set of people who had contributed during initial stages but the new arrivals who could sustain and take the company forward.
Sometimes, any entrepreneur would get into huge moral dilemma when he was forced to upgrade the company to lean, young and energetic as he might be pushed to axe the people who had brought to this stage.
I have derived some consolation when I could understand even Warren Buffet, one of the hardcore capitalists has ever lived is no more of an exception.
It seems, when Buffett was 35, during ’70s after having learnt all the value investing concepts from his guru, Graham, he had invested huge money in “Berkshire Hathaway – Textile company” as it fitted his bill exactly.
Later only he had realized, textiles were dying business as an American worker, in terms of labor costs was not going to be as cheap as Asian worker anytime in the future.
Going forward, Buffet would be left out with only option that he should close down the entire textile operations, take Berkshire’s capital and deploy it elsewhere.
He’s into moral dilemma, “who could explain to them that to increase the overall standard of living required the occasional rise and death of businesses and industries….”
Twenty years after assuming control of Berkshire Hathaway, he decided that it was time to shut down the textile mills.
This raised an interesting dilemma for Buffet: What exactly is the role of a company? Is it simply to maximize profits for shareholders? If so, Buffet reasoned that Berkshire should have shut down its textile operations in the ’70s and investing the proceedings elsewhere. But he didn’t.
When he had shut down Berkshire’s entire textile operations during late ’80s, the obvious question had been posed by his shareholders was:
WHY NOT THEN? WHY NOW?
The epic reply from Buffet was:
“Adam Smith would disagree with my first decision and Karl Marx would disagree with my second;
“But the middle ground is the only position that leaves me comfortable.”
Yes my dear friends. Finding that middle position is the huge challenge and moral dilemma, every entrepreneur has been facing day-to-day.
Searchingly (middle) yours,
🙏Ramu🙏